Nigerian court grants anti-suit injunction in favour of arbitration agreement

In Suit No: LD/17896GCM/2024: P.E Bitomen Resources (Nigeria) Limited v. Cocean Nigeria Integrated Limited, the High Court of Lagos State recently granted an anti-suit injunction in support of an ongoing arbitration (the “Decision”). This decision shows that Nigerian courts are willing to grant anti-suit injunctions, if circumstances require so, thereby confirming their pro-arbitration stance.

Background

The dispute between the parties arose out of an alleged debt owed by P.E Bitumen Resources (Nigeria) Limited (“PEBR”) to Cocean Nigeria Integrated Limited (“Cocean”) under a Transportation Agreement entered into on 13 May 2019 (“Agreement”). The Agreement was governed by Nigerian law and provided for ICC arbitration seated in Lagos, Nigeria. The dispute gave rise to multiple court proceedings initiated by Cocean, despite both parties acknowledging the existence of an arbitration agreement and participating in an arbitration related to the same dispute.

The Multiple Proceedings

Cocean filed five separate actions in breach of the parties’ arbitration agreement:

• On 19 July 2022, Cocean, filed an application before the High Court of Imo State, seeking to recover an alleged debt from PEBR and obtained an ex parte injunction freezing PEBR’s bank accounts (“First Action”).PEBR immediately initiated an ICC arbitration against Cocean and requested the High Court of Imo State to stay proceedings in the First Action and refer the parties to arbitration in line with the Agreement. Cocean participated in the ICC arbitration, signing a Terms of Reference in November 2022.
• However, Cocean subsequently filed a separate application before the High Court of Imo State against PEBR and the arbitral tribunal seeking to, inter alia, restrain the arbitral tribunal from continuing with the arbitration (“Second Action”).
• On 25 September 2023, Cocean filed a fundamental rights enforcement action against PEBR, the tribunal, and their tribunal secretary at the Federal High Court, Port Harcourt Division (“Third Action”). This time, Cocean sought to invalidate the ongoing arbitration.
• On 20 November 2023, Cocean filed a fourth action against PEBR, the arbitral tribunal, their tribunal secretary, and the ICC at the Federal High Court, Port Harcourt Division (“Fourth Action”). Cocean sought an anti-arbitration injunction restraining the arbitral tribunal from continuing with the arbitral proceedings.
• On 21 February 2024, PEBR commenced the action, which is the subject matter of this post, in the High Court of Lagos State, seeking an anti-suit injunction restraining Cocean from any further litigation including the abovementioned four actions.
• On 5 March 2024, PEBR became aware of a fifth action initiated by Cocean against PEBR at the High Court of Imo State seeking an ex parte order directed at two commercial banks to restrict PEBR’s debit transactions (“Fifth Action”). This order was granted on 26 January 2024, i.e., over a month before PEBR was informed of the relevant suit and the said orders.

 At the time of the Decision, the First Action and Second Action had been struck out by the High Court of Imo State, although Cocean had appealed the decision striking out the Second Action. However, the Third Action, Fourth Action and Fifth Action remained pending. PEBR asked the High Court of Lagos State to restrain Cocean from pursuing these and other proceedings against it.

The Decision

In its ruling, the High Court of Lagos Court granted the anti-suit injunction, ordering Cocean to refrain from “commencing, prosecuting, continuing, taking any steps in, enforcing, appealing, or otherwise participating in proceedings against [PEBR] in any court or tribunal, wherever situated, other than the arbitration…”. The court rejected all arguments canvassed by Cocean, including an argument that the arbitration clause, unlike a Scott v Avery clause, did not expressly require parties to resolve their dispute by arbitration before litigating. The court also rejected Cocean’s argument that the anti-suit injunction, if granted, would curtail its constitutional right of access to court. Importantly, the court affirmed its discretionary power to grant anti-suit injunctions and emphasised the need for parties to respect arbitration agreements that they voluntarily concluded. The court condemned Cocean for commencing multiple proceedings in breach of the arbitration agreement which, according to the court, constituted an “abuse of process” and fined Cocean’s counsel for its role in the abuse.

Comment

This case demonstrates the pro-arbitration stance of Nigerian courts, especially courts in Lagos State. It illustrates that where the seat of the arbitration is Lagos, Nigeria, courts are prepared to rein in recalcitrant parties who seek to avoid arbitration agreements. The Decision helps illustrate Nigeria’s commitment to fostering an arbitration-friendly environment and building trust among arbitration users, with a view to positioning the country as a leading seat of arbitration on the African continent.

The author would like to thank Bridget Mutonyi for her contribution to this article.